EGYPTIAN AMERICAN BANK: BOARD OF DIRECTORS

UNCLAS CAIRO 003147

SIPDIS

STATE FOR NEA/ELA, NEA/RA, AND EB/IFD
TREASURY FOR MILLS/NUGENT/PETERS
USAID FOR ANE/MEA MCCLOUD
COMMERCE FOR 4520/ITA/MAC/ANESA/TALAAT

E.O. 12958: N/A
TAGS: ECON EFIN EAID EG
SUBJECT: EGYPTIAN AMERICAN BANK: BOARD OF DIRECTORS
APPROVES SALE

REF: CAIRO 2967


1. (C) The Board of Directors of the Egyptian American Bank
(EAB) met last week to approve the sale of EAB to a strategic
investor, as reported in reftel.
According to EAB General Manager Roderick Richards, the Bank
of Alexandria (BOA) was instructed by the Central Bank of
Egypt (CBE) to sell its 33.8 percent stake in EAB as part of
the preparation for BOA's privatization. American Express
Bank, the other major EAB shareholder with a 40.8 percent
stake, did not want to become the minority stakeholder in the
bank with a new strategic investor, thus prompting the
decision to sell EAB in its entirety. According to Richards,
EAB management, working through an investment bank advisor,
will ask potential purchasers to buy 100% of the bank. This
means potential purchasers will have to offer a price
attractive to the holders of the bank's freely traded shares
(approximately 25 percent). Richards did not anticipate
difficulty finding a purchaser to offer a bid for 100% of the
bank, as EAB is "the strongest bank operating in Egypt."


2. (C) Richards mentioned that one possible scenario for the
sale of EAB is purchase by a regional bank from the Gulf. He
suggested an offer might be received from one of the banks
owned by the Government of Abu Dhabi, which has expressed
interest in investing $1 billion in Egypt. When asked
whether the current management of the bank would stay on, he
hedged a bit, replying the any purchaser would be "foolish"
to remove the bank's current management, as it has made EAB
one of the top performing bank in the Egyptian banking sector.


3. (SBU) Comment: In addition to the sale of EAB, several
other deals have recently been concluded by joint venture
banks. The Arab African International Bank announced plans
to merge with Misr America International Bank and the
National Bank of Egypt announced plans to acquire Mohandes
Bank. The investment firm handling the sale of the 28.6%
public share of Misr International Bank also recently
announced that it would be soliciting offers for the shares
from Arab and international financial institutions. The
banking sector appears to be acting quickly to meet the
directives of the CBE regarding divesting public shares in
joint venture banks. The outcome of EAB's sale will provide
a good indication of international investors' assessment of
the future potential of Egypt's banking sector.


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GRAY